Digitalization has now started to impact most industries and businesses. There is a growing need for companies, their boards, and leaders to respond with strategic decisions based on the understanding of how digitalization impacts their businesses and their business models. Digital progress also affects the way leadership teams and boards should be shaped.
DIGITAL CREATING MARKET DISRUPTION
The ongoing market disruption, churning, and creative destruction is demonstrated by the fact that nearly nine of every ten Fortune 500 companies are gone, merged, or contracted since 1955, when Fortune Magazine made the first measurement.
Only 12% of the 500 largest global companies remain since 2015 according to research by the American Enterprise Institute.
In a recent article by INSEAD Professor Annet Aris, she outlines how the digital world totally changes the market share for companies. Not only is it now possible for the consumer to gain a complete overview of what’s on offer, it also becomes much easier to assess the products’ value.
ACTIVATING LEADERS & BOARDS
The European board association EcoDa is encouraging board associations and their members to revisit the situation of needed changes to strategy, governance approaches as well as competencies.
EcoDa’s 2016 annual conference was held in Brussels under the theme “Are European Boards Ready for a Digitalized World?”: The event included many insightful sharings and debates; you find them summarized in this conference report and this conference video.
Our Chairman at Digoshen, Liselotte Engstam, was honored to be the keynote speaker at the conference, and you can see a shorter video of the keynote speech or access the full keynote presentation, available via the free of charge Digoshen Insight Platform.
Part of the speech was based on the result of the survey Digoshen performed with the members of both EcoDa and of the Swedish Academy of Board Directors during the spring this year. The result of the survey, as well as of research into the actions companies are starting to take, have been published in Digoshen’s recent report which you find via this blog post.
THE ISSUE TO EXPLORE VERSUS EXPLOIT
One of the more widespread actions for companies and leaders is to thoroughly revisit their business strategies for an impact of digital, and find ways to more consciously ensure innovation and create a balance of exploring and exploiting, the so-called organizational ambidexterity.
In a recent interview with Harvard Professor Michael Tushman, he refers to his and Standford Professor Charles O’Reilly research where they have found that innovation can be optimized when a company leverages the potential synergies between a firm’s existing capabilities and ideation investments.
Professor Tushman’s top three recommendations to C-suite leaders include:
- Elevate your exploration efforts such that the teams are directly reporting to your C-Suite.
- Leaders need to build a culture that embraces the contradiction of exploration and exploitation and clearly communicate the logic and aspirations of both to build higher employee engagement.
- C-Suite leaders need to be brave in their path forward. The risk is to pivot towards the familiar exploitation where incremental improvements are prized.
The leaders require courage to stand up for new operating models, enter new markets and if need be, lead change of existing vision statements.
VALUE CREATION BY BOARDS
Boston Consulting Group, BCG, has found in their recent research that Nordic boards could be considered role models and they create exceptional value. They believe that the role of the Nordic boards is a key reason. Nordic boards are constituted by powerful non-executives, separated from executive management. Through this mechanism, the Nordic model aligns the management’s incentives with those of the shareholders and strikes an effective balance between risk taking and stability. The non-executive board also has a clear role in determining the company’s overall goals and strategy.
CREATE BETTER STRATEGY BASED ON FORESIGHT
Boards and leaders need to become better in creating insight from foresight. This is a great challenge in this world of extreme digital progress and pace of innovation. At Digoshen, we are proud to be collaborating with one of the best long-term forecasting research centers in the world, Institue of the Future, IFTF in Silicon Valley. Digoshen CEO, Katy Caroan is a Certified Foresight Practitioner from IFTF, and we are constantly impressed and humbled by their work and the insights they are sharing.
The skill to think about the far-off future is a practical and required leadership skill, rather than just an exercise in intellectual curiosity or something you can hand over to experts only. In some new research led by one of the IFTF’s acclaimed futurists, Jane McGonigal, they have also found direct neurological links to greater creativity, empathy, and optimism, which is needed to create the future vision and enthuse both employees and customers to make the transition.
Thinking about the far-off future isn’t just an exercise in intellectual curiosity. It’s a practical skill that, as new research reveals, has a direct neurological link to greater creativity, empathy, and optimism.
In a recent global leadership event organized by the Aspen Institute on issues and ideas that shape our lives and challenge our times, the IFTF futurist and Game Designer, Jane McGonigal, shared some of the newly researched concepts with the audience. The concepts and three practical habits that will increase the power of your imagination, and which can be applied to increase your foresight ability are shared in this inspirational video from the event.
Besides the exciting research IFTF is doing on Future of Work, IFTF is also together with ACT Foundation, researching the closely linked Future of Education. The research is continuously developing through the inspiring gaming approach designed by McGonigal. You can both learn from the results, and participate yourself in the research at LearningisEarning2026.
ALIGN THE ORGANIZATION FOR A DIGITAL FUTURE
Some companies and digitally insightful executives have already started to align their people, processes, and culture to ensure the organization’s long-term success. In recent research by MIT and Deloitte, they found that digitally mature organizations invested more in their own talent, and their senior-level talents appeared more committed. They also found that they had an expanded appetite for risk and rapid experimentation.
If you like to keep updated on digital business matters, check out our Digoshen Insight Platform with inspiration, reports, and weekly digital magazines.
You can follow us on twitter: @digoshen , our CEO @katycaroan and Chairman @liseeng or contact us at Digoshen if you like to discuss these subjects over coffee in a physical or virtual meeting. We look forward to hear from you!
At Digoshen we believe that Companies, Boards and Business Leadership Teams need to understand more of the digital world to fully leverage the potential when bringing their business into the digital age.
To understand where you and your company stand concerning digital business and leadership progress, take our survey at Digoshen.com/research and get a free of charge personalized report with recommendations on how to move forward. The survey is anonymous and takes about 10 minutes to complete.
Our ambition is to provide inspiration and support to help transition business leaders into more insightful digital positions for themselves and their companies.